True or False: it is free for a company to raise money through retained earnings, because retained earnings represent money that is left over after dividends are paid out to shareholders. True False The cost of equity using the CAPM approach The current risk-free rate-of return (fivp) is 3.86% while the market nsk premium is 6.63%. The Burris Company has a beta of 0.78 , Using the cap.tal asset pncing model (CAPM) approach, Burns's cost of equity is The cost of equity using the bond yield plus risk premium approach The cost of equity using the bond yield plus risk premium approach The Jackson Company is closely held and, therefore, cannot generate reliable inputs with which to use the CAPM method for estimating a company's cost of internal equity. Jackson's bonds yield 11.52%, and the firm's analysts estimate that the firm's risk premium on its stock over its bonds is 3.55%. Based on the bond-yield-plus-risk-premum approach, Jackson's cost of internal equity is: 15.07%18.84%18.08%16.58% The cost of equity using the discounted cash flow (or dividend growth) approach Kirby Enterprises's stock is currently-selling for $32.45 per share, and the firm expects its pen-share dividend to be $2.35 in one year. Analysts project the firm's growth rate to be constant at 5.72%. Estmating the cost of equity using the discounted cash flow (or dividend growth) approach, what is kirby's cost of internal equity? 13.61% 16.20n 17.50% 12.96% Estimating growth rates It is often difficult to estimate the expected future dividend growth rate for use in estimating the cost of existing equity using the DCF or DG approach. In general, there are three avalable methods to generate such an estimate: - Carry forward a historical realized growth rate, and apply it to the future, - Locate and apply an expected future growth rate prepared and published by security analysts. - Use the retention growth model. Suppose Kirby is currently distributing 45% of its earnings in the form of cast dividends. It has also histoncally generated an average return on equity (ROE) of 22%. Kirby's estimated growth rate is %